NEW YORK, Nov. 19, 2012 /PRNewswire/ -- JANA Partners LLC
today announced four independent director candidates it intends to
propose together with JANA Managing Partner Barry Rosenstein for
election to the Board of Agrium Inc. ("Agrium") (TSX / NYSE:
AGU): David Bullock,
Stephen Clark, Mitchell Jacobson, and The Honourable Lyle
Vanclief. JANA believes that these individuals will add
critical oversight to a Board that for years has tolerated
suboptimal capital allocation, failure to manage costs, structural
issues, lack of transparency, and share price underperformance
relative to a weighted average of Agrium's peers and to its
potential. JANA, which was already Agrium's largest
shareholder, also disclosed that its stake has risen to more than
6% of Agrium's shares. Updated information is available at
www.JANAAguAnalysis.com.
Three of JANA's candidates are seasoned distribution executives
with proven records creating value as operators, and in some cases
directors, at companies recently cited by Agrium as peers for its
distribution business ("Retail"), while none of Agrium's current
independent directors have such experience despite the substantial
size and significance of Retail. These individuals also have
direct experience operating distribution businesses in the U.S.,
Retail's principal market, as well as other geographies. JANA's
fourth independent candidate is the former Canadian Minister of
Agriculture, who will bring to the Board his experience dealing
with complex agricultural issues in government as well as his prior
direct experience operating a commercial farm.
"Agrium's Board has had every opportunity to respond
constructively to our analysis, and instead simply attempted to
avoid the issues," said Rosenstein, citing the following governance
lapses:
- Refusal to Respond: As one leading analyst
who has not sided with JANA or Agrium noted, "the consensus seems
to be that Agrium is going out of its way to avoid addressing
JANA's questions head on" and "the depth and breadth of unanswered
questions at Agrium makes it a clear and troubling outlier in an
industry known for relatively good disclosure practices."
(CLSA, Nov. 5, 2012)
- Manipulative Analysis: When challenged to
address Retail's undervaluation, Agrium simply changed the Retail
valuation comparables it had advocated for years to include new
lower-multiple (and in most cases inapplicable) "midnight"
comparables in order to avoid the issue. Referring to this
"switcheroo," a Wall Street Journal writer noted "it seems
odd that Agrium, having done so many retail deals, would have
directed analysts toward such a different peer group only last
year," which "also calls into question how much value really has
been created by Agrium's retail strategy." (Aug. 21, 2012)
- Failing to Keep Shareholders Informed:
Agrium kept shareholders in the dark before its recent significant
earnings miss, despite having embarked on a lengthy shareholder
outreach tour to tout its short-term performance following JANA's
engagement, and also repurchased significant amounts of its stock
at much higher prices just before this miss led to a significant
stock price decline. This means that the Board either sought
to keep this news from shareholders for as long as possible or has
no handle on Agrium's business, neither of which is
acceptable.
- Unverified Claims of Support: Rather than
discuss the merits, Agrium claims that shareholders support the
status quo, yet independent observers refute this claim and Agrium
has begun implementing some of JANA's proposals, including
dramatically increasing its capital return and improving its
disclosure. In the words of one Globe & Mail
writer, "For a firm that says it has strong support from an
overwhelming number of shareholders, Agrium Inc. is sure doing what
it can to keep them happy." (Oct. 22,
2012)
- Abdicating Judgment to Mercenary Advisors.
To defend its structure and strategy, Agrium turned to the same
defense bankers at Morgan Stanley that argued against its
structure and strategy in defending CF Industries against Agrium's
hostile takeover attempt. As one analyst noted, "the Board's
response to very reasonable questions was to hire the most
anti-shareowner advisor it could find." (CLSA, Nov. 5, 2012)
JANA's candidates collectively possess the skills and experience
to help the Board address, rather than avoid, the critical issues
facing Agrium including:
- Driving Operational Performance: Despite
spending more than $4 billion in
Retail acquisitions, Agrium has failed to leverage this growth to
manage operating costs the way other distribution companies have,
causing Agrium to substantially underperform its potential, while
JANA's candidates with distribution experience have helped
successfully integrate and grow distribution businesses including
realizing substantial cost synergies and margin expansion. In
addition, Agrium has failed to utilize best-in-class Retail metrics
to appropriately measure performance over time and set future
performance targets, which JANA's candidates can help address given
their experience.
- Improving Capital Allocation: Agrium
has consistently failed to generate acceptable returns on
acquisitions and investments, properly manage working capital in
Retail, and, until prodded by JANA, had the worst record among
peers in returning capital to shareholders, while JANA's candidates
have the experience to address these issues.
- Fixing Agrium's Structure: Given Retail's
persistent undervaluation, Agrium is in dire need of an unbiased
review of its conglomerate structure free of the tainted advice of
its current mercenary defense advisors who have been tasked with
defending the status quo. The importance of addressing
Retail's undervaluation honestly was recently highlighted by a
leading industry analyst who has not sided with JANA or Agrium, and
who noted that "we view JANA Partners' campaign to have the company
spin off retail and increase cash distributions to shareholders as
a positive as it highlights the hidden value of retail."
(Susquehanna Financial Group, Nov. 8,
2012)
Stephen Clark, who has more than
30 years of distribution experience, commented that, "Agrium has
enormous additional value creation potential, and I'm confident
that I can put my distribution experience to work helping the board
to unlock that value for all shareholders."
"At the end of the day, Agrium's future is in the hands of its
shareholders," Rosenstein added, "and we believe they will
overwhelmingly support change to realize Agrium's true value."
Each of JANA's candidates has invested personally in Agrium and
will also be incentivized by JANA based upon the performance of
Agrium's shares for all Agrium shareholders. JANA stated today
that it is willing to work with the current Board to ensure that
any changes in composition will not raise regulatory issues for or
burdens on Agrium, including with respect to the number of Canadian
directors who are ultimately seated.
Biographical Information for JANA's Candidates
David
Bullock: Mr. Bullock was the Chief Financial
Officer of Graham Packaging Inc. ("Graham Packaging"), a global
supplier of plastic packaging, from 2009 to 2011, where he led the
company from private ownership under Blackstone to a public listing
and its ultimate sale to Reynolds Group at a substantial premium to
its IPO price.
Prior to Graham Packaging, Mr. Bullock was Chief Financial
Officer (2003-2007) and Chief Operating Officer (2007-2008) of
United Agri Products, Inc. ("UAP") which, prior to its acquisition
by Agrium, was the largest independent distributor of agricultural
input products in the U.S. and Canada with approximately 350 stores. At UAP,
Mr. Bullock was responsible for improving the business including
the creation and implementation of its supply chain and logistics
strategy and implementation of its core operating systems and
controls. UAP was cited by Agrium's financial advisor, Morgan
Stanley, as the best comparable peer for Agrium's Retail business
(see Agrium's August 20, 2012
Investor Update, page 9).
Mr. Bullock was a key member of the management team that created
substantial value by separating UAP from agricultural conglomerate
ConAgra Foods, Inc. in an acquisition by Apollo Management and then
turning UAP around through substantial operating improvements. Mr.
Bullock also oversaw the subsequent public offering of UAP and its
eventual sale to Agrium at a substantial premium to its IPO price.
The successful turnaround of UAP has made it one of the top
performing investments in Apollo's
history. Prior to UAP, Mr. Bullock held management positions with
FMC Corporation. Mr. Bullock has a B.S. from Lehigh University and an M.B.A. from Cornell University.
According to JANA, during Mr. Bullock's tenure at UAP from 2002
to 2008, the company experienced significant operating profit
growth and margin expansion, driving EBITDA growth of more than 16%
per year.
Stephen
Clark: Mr. Clark is a member of the
Supervisory Board of Brenntag AG. Mr. Clark had previously served
as Chief Executive Officer from 2006 to 2011 and as President of
Brenntag North America from 1990 to 2006. Mr. Clark managed
Brenntag during its private ownership by two different private
equity investors (Bain Capital and BC Partners), and then led the
company through a successful public offering in 2010.
Brenntag AG is the global market leader in distribution for
industrial and specialty chemicals with over $12 billion in total sales and an enterprise
value of more than $8 billion.
Brenntag was cited by Agrium's financial advisor as a relevant
distribution peer for Agrium's Retail business (see Agrium's
August 20, 2012 Investor Update, page
10). Mr. Clark is a graduate of Pennsylvania State University.
According to JANA, during Mr. Clark's tenure as CEO from 2006 to
2011, Brenntag grew EBITDA by more than 15% per year and the
company experienced significant margin expansion despite a
challenging macroeconomic environment, and since the company's IPO,
Brenntag shareholders have realized a total annual return of 25%
per year through November 16, vs. a
3% annual return for the STOXX 600 index over the comparable
period.
Mitchell
Jacobson: Mr. Jacobson is Chairman of the
Board and one of the principal shareholders of MSC Industrial
Direct Co., Inc. Mr. Jacobson previously served as Chief
Executive Officer of MSC from its formation as a public company in
October 1995 to November 2005, and has since served as its
Chairman and remained its largest shareholder. MSC today has
a $4 billion market capitalization
and is one of the largest distributors of a broad range of
metalworking and maintenance, repair and operating products with
over 600,000 unique SKUs and over 100 branches in the United
States. MSC was also cited by Agrium's financial advisor as a
relevant distribution peer for Agrium's Retail business
(Agrium's August 20, 2012 Investor
Update presentation, page 10, footnote 1).
In addition to his experience with MSC, Mr. Jacobson is an
investor and board member of privately held HD Supply, Inc., a
leading industrial distributor for professional customers in the
infrastructure, maintenance, repair and improvement and specialty
construction markets with approximately $8
billion in annual sales. He is a member of the Board of
Trustees for both New York University
and the New York University School of
Law and is a member of the Investment Committee of the
New York University School of Law
Foundation. He serves as a Trustee for New York-Presbyterian
Hospital and is a member of the Hospital's Investment Committee as
well as Co-Chair of the Hedge Fund Subcommittee and a member of
both the Asset Allocation and Private Investments Subcommittees.
Mr. Jacobson is a graduate of Brandeis
University and the New York University
School of Law.
According to JANA, under Mr. Jacobson's leadership, MSC has
grown operating profit more than 12 fold since its IPO through
August 2012, representing compound
annual growth of 16%, in the process realizing operating leverage
and margin expansion, and over this 17 year time period MSC's
shareholders have realized a total annual return of 12% per year
through November 16, vs. a 7% annual
return for the S&P 500 index over the comparable period.
The Honourable Lyle Vanclief, P.C., P.AG
(Dist): Mr. Vanclief was formerly the Minister
of Agriculture and Agri-Food Canada (1997-2003) and a Member of
Parliament (1988-2004). In his role as Minister, Mr. Vanclief
had responsibility for a $140 billion
industry and oversaw a Ministry with 12,000 employees. His
responsibilities as Minister included stewardship of various
Canadian federal agencies including the Canadian Food Inspection
Agency, Farm Credit Canada, the Canadian Dairy Commission, the
Canadian Grain Commission and the National Farm Products
Council.
Prior to his government service, Mr. Vanclief spent twenty-two
years as an entrepreneur in the agriculture industry, during which
time he built Willowlee Farms Limited into a diversified fruit,
vegetable, grains, oilseeds and livestock operation in Prince
Edward County, Ontario. Mr. Vanclief currently serves on the
board of Bioniche Life Sciences Inc. Mr Vanclief is a graduate of
the University of Guelph in Crop
Science, a professional Agrologist, a Fellow of the Agricultural
Institute of Canada, a graduate of
the Directors Education Program at the Rotman School of Management
(University of Toronto) and is an
Institute certified director with the professional designation
ICD.D. Currently he provides agricultural and agri-food
consulting. Mr. Vanclief was inducted into the Canadian
Agricultural Hall of Fame in 2010.
Barry Rosenstein: Barry Rosenstein is the founder and Managing
Partner of JANA Partners LLC, an investment advisor with
approximately $3.5 billion in
investments and commitments, founded in 2001, and registered with
the United States Securities and Exchange Commission. JANA is a
recognized leader in creating value through shareholder activism
and has on numerous occasions successfully challenged boards and
management to focus on creating shareholder value, including with
respect to Marathon Petroleum, TNT, McGraw Hill, El Paso,
Charles River, CNET, Kerr-McGee
Corp., Artesyn Technologies, Houston Exploration Company, InterCept
and SourceCorp. Mr. Rosenstein has served on several public
boards including the boards of Convergys Corporation and CoPart,
Inc.
Prior to establishing JANA, Mr. Rosenstein was the founder and
Managing Partner of Sagaponack Partners, a private equity
fund. Mr. Rosenstein began his career as an investment banker
specializing in mergers and acquisitions with Merrill Lynch in
New York and was also a principal
in charge of corporate takeover for Asher
Edelman's Plaza Securities Corporation. Mr. Rosenstein
graduated from Lehigh University (1981)
Phi Beta Kappa and earned an MBA from the University of Pennsylvania's Wharton School of
Business (1984). Mr. Rosenstein is a trustee of Brown University and the 92nd Street Y in
New York City and a board member
of Make the Road New York.
All $ amounts refer to US dollars.
Disclaimers
The Shareholder has not sought or obtained consent from any
third party to the use herein of previously published information.
Any such information should not be viewed as indicating the support
of such third party for the views expressed herein.
Except for the historical information contained herein, the
matters addressed in these materials are forward-looking statements
that involve certain risks and uncertainties. You should be aware
that actual results could differ materially from those contained in
the forward-looking statements. The Shareholder does not assume any
obligation to update the forward-looking information.
Information in Support of Public Broadcast
Solicitation
JANA is relying on the exemption under section 9.2(4) of
National Instrument 51-102 – Continuous Disclosure
Obligations to make this public broadcast solicitation.
The following information is provided in accordance with corporate
and securities laws applicable to public broadcast
solicitations.
This solicitation is being made by JANA, and not by or on behalf
of the management of Agrium.
The address of Agrium is 13131 Lake Fraser Drive S.E.,
Calgary, Alberta T2J 7E8.
JANA has filed an information circular containing the
information required by Form 51-102F5 – Information
Circular in respect of its proposed nominees, which is
available on Agrium's company profile on SEDAR at
www.sedar.com.
Proxies for the Agrium shareholders' meeting may be solicited by
mail, telephone, email or other electronic means as well as by
newspaper or other media advertising, and in person by managers,
directors, officers and employees of JANA, who will not be
specifically remunerated therefor. In addition, JANA may solicit
proxies in reliance upon the public broadcast exemption to the
solicitation requirements under applicable Canadian corporate and
securities laws, conveyed by way of public broadcast, including
through press releases, speeches or publications, and by any other
manner permitted under applicable Canadian laws. JANA may
engage the services of one or more agents and authorize other
persons to assist it in soliciting proxies on behalf of
JANA. All costs incurred for the solicitation will be borne by
JANA.
JANA has entered into agreements with Kingsdale Shareholder
Services Inc. ("Kingsdale") and The Laurel Hill Advisory Group
Company ("Laurel Hill") pursuant to
which Kingsdale and Laurel Hill have
agreed to assist JANA in soliciting shareholders should JANA
commence a formal solicitation of proxies. Kingsdale's
responsibilities will principally include advising JANA on
governance best practices, where applicable, liaising with proxy
advisory firms, developing and implementing shareholder
communication and engagement strategies, and advising with
respect to meeting and proxy protocol. Laurel Hill will be principally responsible for
the solicitation of retail shareholders and other strategic advice.
Pursuant to the agreement with Kingsdale, for its solicitation
services, Kingsdale would receive a fee in the range of
$125,000 to $250,000, plus
disbursements and a telephone call fee. In addition, Kingsdale
may be entitled to a success fee on the successful completion of
JANA's solicitation, as determined by JANA in consultation with
Kingsdale. Kingsdale will also receive a separate fee for its other
services. Pursuant to the agreement with Laurel Hill, Laurel
Hill would receive a fee of up to $100,000, plus disbursements and a telephone call
fee. In addition, Laurel Hill will
be entitled to a success fee of $100,000 on the successful completion of JANA's
solicitation. All costs incurred for the solicitation will be borne
by JANA.
JANA is not requesting that Agrium shareholders submit a proxy
at this time. Once JANA has commenced a formal solicitation
of proxies, a registered holder of common shares of Agrium that
gives a proxy may revoke it: (a) by completing and signing a valid
proxy bearing a later date and returning it in accordance with the
instructions contained in the form of proxy to be provided by JANA,
or as otherwise provided in the final proxy circular, once made
available to shareholders; (b) by depositing an instrument in
writing executed by the shareholder or by the shareholder's
attorney authorized in writing, as the case may be: (i) at the
registered office of Agrium at any time up to and including the
last business day preceding the day the meeting of Agrium
shareholders or any adjournment or postponement of the meeting is
to be held, or (ii) with the chairman of the meeting prior to its
commencement on the day of the meeting or any adjournment or
postponement of the meeting; or (c) in any other manner permitted
by law. A non-registered holder of common shares of Agrium
will be entitled to revoke a form of proxy or voting instruction
form given to an intermediary at any time by written notice to the
intermediary in accordance with the instructions given to the
non-registered holder by its intermediary.
To the knowledge of JANA, neither JANA nor any of its managers,
directors or officers, or any associates or affiliates of the
foregoing, nor any of the Shareholder Nominees, or their respective
associates or affiliates, has: (i) any material interest, direct or
indirect, in any transaction since the beginning of Agrium's most
recently completed financial year or in any proposed transaction
that has materially affected or would materially affect Agrium or
any of its subsidiaries; or (ii) any material interest, direct or
indirect, by way of beneficial ownership of securities or
otherwise, in any matter currently known to be acted upon at the
meeting of Agrium shareholders other than the election of
directors.
For more info contact JANA Partners LLC at (212) 455 0900
SOURCE JANA Partners LLC